Taxes Consolidation Act 1997

Type Act

Publication 1997-11-30

State In force

Source Irish Statute Book

articles 1104

(ii) that the business is or will be carried on from a fixed place of business established in a permanent building and has or will have such equipment, stock and other facilities as in the opinion of the Revenue Commissioners are required for the purposes of the business,

(iii) that in connection with the business records to which section 886(2) refers are being or will be kept, and any other records normally kept in connection with such a business are being or will be kept properly and accurately,

(iv) that—

(I) the person, any partnership in which the person is or was a partner and any company (within the meaning of the Companies Act, 1963) of which the person is or was a proprietary director or proprietary employee,

(II) in a case where the person is a partnership, each partner, and

(III) in a case where the person is a company, each director of the company and any person who is either the beneficial owner of, or able, directly or indirectly, to control, more than 15 per cent of the ordinary share capital of the company, has throughout the qualifying period complied with all the obligations imposed by the Tax Acts, the Capital Gains Tax Acts or the Value-Added Tax Act, 1972, in relation to—

(A) the payment or remittance of the taxes required to be paid or remitted under those Acts,

(B) the delivery of returns, and

by that individual, partnership or company, as the case may be, and

(v) that there is good reason to expect that that person, partnership or company will comply with the obligations referred to in subparagraph (iii) in relation to periods ending after the date of termination of the qualifying period.

(b) A person in respect of whom the Revenue Commissioners are not satisfied in relation to any one or more of the matters specified in subparagraphs (i) to (iv) of paragraph (a) shall nevertheless, for the purposes of the issue of a certificate of authorisation, be treated as a person in respect of whom they are so satisfied if the Revenue Commissioners are of the opinion that in all the circumstances such person's failure to satisfy them in relation to such matter or matters ought to be disregarded for those purposes.

(c) A certificate of authorisation issued under this subsection shall be valid for such period as the Revenue Commissioners may provide by regulations made pursuant to subsection (6).

(12) (a) Where a subcontractor to whom a certificate of authorisation has been issued produces it to a principal, the principal shall apply to the Revenue Commissioners for a card (in this Chapter referred to as a “relevant payments card”) in respect of the subcontractor.

(b) Where on such application the Revenue Commissioners are satisfied that a relevant payments card in respect of the subcontractor ought to be issued to the principal, they shall issue such a card to the principal who on receiving the card shall, subject to subsection (13), be entitled during the income tax year (or the unexpired portion of the income tax year) to which the relevant payments card relates to make payments without deduction of tax to the subcontractor named in the card.

(13) (a) Where it appears to the Revenue Commissioners that—

(i) a certificate of authorisation was issued on the basis of false or misleading information,

(ii) a certificate of authorisation would not have been issued if information obtained subsequent to its issue had been available at the date of its issue,

(iii) a person to whom a certificate of authorisation was issued has permitted it to be misused,

(iv) in the case of a certificate issued to a company, there has been a change in control (within the meaning of section 432) of the company,

(v) a person to whom a certificate of authorisation was issued has failed to comply with any of the obligations imposed on such person by the Tax Acts, the Capital Gains Tax Acts, the Value-Added Tax Act, 1972, or by any regulations made thereunder in relation to—

(I) the payment or remittance of the taxes required to be paid or remitted under any of those Acts,

(II) the delivery of returns, and

(III) requests to supply to an inspector accounts of, or other information about, any business carried on by such person,

(vi) the business of carrying out relevant contracts in relation to which the certificate of authorisation was issued has ceased to be carried on by the person to whom the certificate was issued,

the Revenue Commissioners may at any time cancel the certificate and give notice in writing to that effect to any principal.

(b) Where a principal receives a notice under paragraph (a), the principal shall—

(i) deduct tax in accordance with subsection (1) from any payments made to the person to whom the notice relates on or after the date of receipt of the notice, and

(ii) return to the Revenue Commissioners any relevant payments cards issued to the principal in relation to that person and any relevant tax deduction card kept by the principal in relation to that person.

(c) The Revenue Commissioners shall advise a person in relation to whom a notice under paragraph (a) was issued of the issue of such notice and shall require such person to return to them forthwith the certificate of authorisation issued to such person.

(14) (a) Where any person—

(i) for the purpose of obtaining a certificate of authorisation or a relevant payments card makes any false statement or furnishes any document which is false in a material particular,

(ii) disposes of a certificate of authorisation otherwise than by the return of the certificate to the Revenue Commissioners,

(iii) fails to return a certificate of authorisation to the Revenue Commissioners when required to do so in accordance with subsection (13)(c),

(iv) is in possession of a certificate of authorisation that was not issued to such person by the Revenue Commissioners, or

(v) produces to a principal a certificate of authorisation after such person has been advised by the Revenue Commissioners of the issue of a notice under subsection (13)(c),

such person shall be guilty of an offence and shall be liable on summary conviction to a fine of £1,000 or, at the discretion of the court, to imprisonment for a term not exceeding 6 months or to both the fine and the imprisonment.

(b) Any person who aids, abets, counsels or procures—

(i) the obtaining of a certificate of authorisation by means of a false statement,

(ii) the use by any person, other than the person to whom it was issued by the Revenue Commissioners, of a certificate of authorisation, or

(iii) the production to a principal of a document that is not a certificate of authorisation but purports to be such a certificate,

shall be guilty of an offence and shall be liable on summary conviction to a fine of £1,000 or, at the discretion of the court, to imprisonment for a term not exceeding 6 months or to both the fine and the imprisonment.

(i) fails to enter on a relevant payments card or relevant tax deduction card such particulars as are required to be entered on that card by virtue of this section and any regulations made under this section,

(ii) fails to return to the Revenue Commissioners the relevant payments card or relevant tax deduction card in accordance with subsection (13)(b),

(iii) returns to the Revenue Commissioners any such card on which are entered particulars which are incorrect in any material particular,

(iv) fails to comply with any provision of regulations made under this section requiring such person—

(I) to make any declaration,

(II) to provide any information or particulars to principals, or

(III) to keep or produce any records, documents or declarations,

(v) fails to give a subcontractor from whom tax has been deducted under subsection (1) a certificate of deduction in the prescribed form containing such particulars as are required to be entered in that certificate by virtue of any regulations made under this section, or

(vi) being a company to which a certificate of authorisation has been issued under subsection (11), fails to notify the Revenue Commissioners of a change in control (within the meaning of section 432) of the company,

shall be guilty of an offence and shall be liable on summary conviction to a fine of £1,000.

(15) Notwithstanding any other enactment, summary proceedings in respect of offences under this section may be instituted within 10 years of the commission of the offence.

(16) Section 987(4), subsection (4) of section 1052 (other than as that subsection applies in relation to proceedings for the recovery of a penalty in relation to a return referred to in sections 879 and 880), subsections (3) and (7) of section 1053 and sections 1068 and 1069 shall, with any necessary modifications, apply for the purposes of this section and any regulations made under this section as they apply for the purposes of those provisions.

(17) Any person who is aggrieved by a refusal by the Revenue Commissioners to issue a certificate of authorisation under this section may, by notice in writing to that effect given to the Revenue Commissioners within 30 days from the date of such refusal, apply to have such person's application heard and determined by the Appeal Commissioners.

(18) The Appeal Commissioners shall hear and determine an appeal made to them under subsection (17) as if it were an appeal against an assessment to income tax and, subject to subsection (19), the provisions of the Income Tax Acts relating to such an appeal (including the provisions relating to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law) shall apply accordingly with any necessary modifications.

(19) On the hearing of an appeal made under subsection (17), the Appeal Commissioners shall have regard to all matters to which the Revenue Commissioners may or are required to have regard under this section.

(20) For the purposes of the hearing or rehearing of an appeal under subsection (17), the Revenue Commissioners may nominate any of their officers to act on their behalf.

TAXATION OF CHARGEABLE GAINS PART 19 Principal Provisions Relating to Taxation of Chargeable Gains

CHAPTER 1 Assets and acquisitions and disposals of assets

532 Assets. [CGTA75 s7(1); FA80 s62(a)]

532.—All forms of property shall be assets for the purposes of the Capital Gains Tax Acts whether situated in the State or not, including—

(a) options, debts and incorporeal property generally,

(b) any currency other than Irish currency, and

533 Location of assets. [CGTA75 s48]

533.—The situation of assets specified in this section shall, except where otherwise provided by section 29, be determined for the purposes of the Capital Gains Tax Acts in accordance with the following provisions:

(a) the situation of rights or interests (otherwise than by means of security) in or over immovable property shall be that of the immovable property;

(b) subject to this section, the situation of rights or interests (otherwise than by means of security) in or over tangible movable property shall be that of the tangible movable property;

(c) subject to this section, a debt, secured or unsecured, shall be situated in the State only if the creditor is resident in the State;

(d) shares or securities issued by any municipal or governmental authority, or by any body created by such an authority, shall be situated in the country of that authority;

(e) subject to paragraph (d), registered shares or securities shall be situated where they are registered and, if registered in more than one register, where the principal register is situated;

(f) a ship or aircraft shall be situated in the State only if the owner is resident in the State, and an interest or right in or over a ship or aircraft shall be situated in the State only if the person entitled to the interest or right is resident in the State;

(g) the situation of goodwill as a trade, business or professional asset shall be at the place where the trade, business or profession is carried on;

(h) patents, trade marks and designs shall be situated where they are registered and, if registered in more than one register, where each register is situated, and copyright, franchises, rights and licences to use any copyright material, patent, trade mark or design shall be situated in the State if they, or any rights derived from them, are exercisable in the State;

(i) a judgment debt shall be situated where the judgment is recorded.

534 Disposals of assets. [CGTA75 s8(1)]

534.—For the purposes of the Capital Gains Tax Acts—

(a) references to a disposal of an asset include, except where the context otherwise requires, references to a part disposal of an asset, and

(b) there shall be a part disposal of an asset where an interest or right in or over the asset is created by the disposal, as well as where it subsists before the disposal, and, generally, there shall be a part disposal of an asset where, on a person making a disposal, any description of property derived from the asset remains undisposed of.

535 Disposals where capital sums derived from assets. [CGTA75 s8(2) and (7)]

535.—(1) In this section, “capital sum” means any money or money's worth not excluded from the consideration taken into account in the computation of the gain under Chapter 2 of this Part.

(2) (a) Subject to sections 536 and 537(1) and to any other exceptions in the Capital Gains Tax Acts, there shall be for the purposes of those Acts a disposal of an asset by its owner where any capital sum is derived from the asset notwithstanding that no asset is acquired by the person paying the capital sum, and this paragraph shall apply in particular to—

(i) capital sums received by means of compensation for any kind of damage or injury to an asset or for the loss, destruction or dissipation of an asset or for any depreciation or risk of depreciation of an asset,

(ii) capital sums received under a policy of insurance of the risk of any kind of damage or injury to, or the loss or depreciation of, an asset,

(iii) capital sums received in return for forfeiture or surrender of a right or for refraining from exercising a right, and

(iv) capital sums received as consideration for use or exploitation of an asset.

(b) Without prejudice to paragraph (a)(ii) but subject to paragraph (c), neither the rights of the insurer nor the rights of the insured under any policy of insurance, whether the risks insured relate to property or not, shall constitute an asset on the disposal of which a gain may accrue, and inthis paragraph “policy of insurance” does not include a policy of assurance on human life.

(c) Paragraph (b) shall not apply where the right to any capital sum within paragraph (a)(ii) is assigned after the event giving rise to the damage or injury to, or the loss or depreciation of, an asset has occurred, and for the purposes of the Capital Gains Tax Acts such an assignment shall be deemed to be a disposal of an interest in the asset concerned.

536 Capital sums: receipt of compensation and insurance moneys not treated as a disposal in certain cases. [CGTA75 s29(1) to (3) and (5)]

536.—(1) (a) Subject to paragraph (b), where the recipient so claims, receipt of a capital sum within subparagraph (i), (ii), (iii) or (iv) of section 535(2) (a) derived from an asset which is not lost or destroyed shall not be treated as a disposal of the asset if—

(i) the capital sum is wholly applied in restoring the asset, or

(ii) the capital sum is applied in restoring the asset except for a part of the capital sum which is not reasonably required for the purpose and which is small as compared with the whole capital sum;

but, if the receipt is not treated as a disposal, all sums which, if the receipt had been so treated, would have been taken into account as consideration for that disposal in the computation of a gain accruing on the disposal shall be deducted from any expenditure allowable under Chapter 2 of this Part as a deduction in computing a gain on the subsequent disposal of the asset.

(b) Paragraph (a) shall not apply to cases within subparagraph (ii) of that paragraph if immediately before the receipt of the capital sum there is no expenditure attributable to the asset under paragraphs (a) and (b) of section 552(1) or if the consideration for the part disposal deemed to be effected on receipt of the capital sum exceeds that expenditure.

(2) Where an asset is lost or destroyed and a capital sum received as compensation for the loss or destruction, or under a policy of insurance of the risk of the loss or destruction, is, within one year of receipt or such longer period as the inspector may allow, applied in acquiring an asset in replacement of the asset lost or destroyed, the owner shall on due claim be treated for the purposes of the Capital Gains Tax Acts as if—

(a) the consideration for the disposal of the old asset were (if otherwise of a greater amount) of such amount as would secure that on the disposal neither a loss nor a gain accrued to such owner, and

(b) the amount of the consideration for the acquisition of the new asset were reduced by the excess of the amount of the capital sum received as compensation or under the policy of insurance, together with any residual or scrap value, over the amount of the consideration which such owner is treated as receiving under paragraph (a).

(3) A claim shall not be made under subsection (2) if part only of the capital sum is applied in acquiring the new asset; but, if all of that capital sum except for a part which is less than the amount of the gain (whether all chargeable gain or not) accruing on the disposal of the old asset is so applied, the owner shall on due claim be treated for the purposes of the Capital Gains Tax Acts as if—

(a) the amount of the gain so accruing were reduced to the amount of that part of the capital sum not applied in acquiring the new asset (and, if not all chargeable gain, with a proportionate reduction in the amount of the chargeable gain), and

(b) the amount of the consideration for the acquisition of the new asset were reduced by the amount by which the gain is reduced under paragraph (a).

(4) This section shall not apply in relation to a wasting asset.

537 Mortgages and charges not to be treated as disposals. [CGTA75 s8(4), (5) and (6)]

537.—(1) The conveyance or transfer as security of an asset or of an interest or right in or over an asset, or the transfer of a subsisting interest or right as security in or over an asset (including a retransfer on redemption of the security), shall not be treated for the purposes of the Capital Gains Tax Acts as involving any acquisition or disposal of the asset.

(2) Where a person entitled to an asset as security or to the benefit of a charge or incumbrance on an asset deals with the asset for the purpose of enforcing or giving effect to the security, charge or incumbrance, such person's dealings with the asset shall be treated for the purposes of the Capital Gains Tax Acts as if they were done through such person as nominee by the person entitled to the asset subject to the security, charge or incumbrance, and this subsection shall apply to the dealings of any person appointed to enforce or give effect to the security, charge or incumbrance as receiver and manager or judicial factor as it applies to the dealings of the person so entitled.

(3) An asset shall be treated as having been acquired free of any interest or right as security subsisting at the time of any acquisition of the asset, and as being disposed of free of any such interest or right subsisting at the time of the disposal and, where an asset is acquired subject to any such interest or right, the full amount of the liability thereby assumed by the person acquiring the asset shall form part of the consideration for the acquisition and disposal in addition to any other consideration.

538 Disposals where assets lost or destroyed or become of negligible value. [CGTA75 s12(3), (4) and (5)]

538.—(1) Subject to the Capital Gains Tax Acts and in particular to section 540, the occasion of the entire loss, destruction, dissipation or extinction of an asset shall for the purposes of those Acts constitute a disposal of the asset whether or not any capital sum as compensation or otherwise is received in respect of the destruction, dissipation or extinction of the asset.

(2) Where on a claim by the owner of an asset the inspector is satisfied that the value of an asset has become negligible, the inspector may allow the claim, and thereupon the Capital Gains Tax Acts shall apply as if the claimant had sold and immediately reacquired the asset for a consideration of an amount equal to the value specified in the claim.

(3) For the purposes of subsections (1) and (2), a building and any permanent or semi-permanent structure in the nature of a building may be regarded as an asset separate from the land on which it is situated; but, where either of those subsections applies in accordance with this subsection, the person deemed to make the disposal of the building shall be treated as if such person had also sold and immediately reacquired the site of the building or structure (including in the site any land occupied for purposes ancillary to the use of the building or structure) for a consideration equal to its market value at that time.

539 Disposals in cases of hire purchase and similar transactions. [CGTA75 s10(2)]

539.—A hire purchase or other transaction under which the use and enjoyment of an asset is obtained by a person for a period at the end of which the property in the asset will or may pass to such person shall be treated for the purposes of the Capital Gains Tax Acts, both in relation to such person and in relation to the person from whom the use and enjoyment of the asset is obtained, as if it amounted to an entire disposal of the asset to such person at the beginning of the period for which such person obtains the use and enjoyment of the asset, but subject to such adjustments of tax, whether by means of repayment or discharge of tax or otherwise, as may be required where the period for which such person has the use and enjoyment of the asset terminates without the property in the asset passing to such person.

540 Options and forfeited deposits. [CGTA75 s47(1) to (6) and (8) to (11); FA92 s63]

540.—(1) In this section—

“quoted option” means an option which at the time of abandonment or other disposal is quoted and dealt in on a stock exchange in the State or elsewhere in the same manner as shares;

“traded option” means an option which at the time of abandonment or other disposal is quoted on a stock exchange or a futures exchange in the State or elsewhere;

references to an option include references to an option binding the grantor to grant a lease for a premium or to enter into any other transaction which is not a sale, and references to buying and selling in pursuance of an option shall be construed accordingly.

(2) Without prejudice to sections 534 and 535, the grant of an option, including—

(a) the grant of an option binding the grantor to sell an asset the grantor does not own and, because the option is abandoned, never has occasion to own, and

(b) the grant of an option binding the grantor to buy an asset which, because the option is abandoned, the grantor does not acquire,

shall constitute the disposal of an asset (being the option) for the purposes of the Capital Gains Tax Acts, but subject to the following provisions of this section as to treating the grant of an option as part of a larger transaction.

(3) Where an option is exercised, the grant of the option and the transaction entered into by the grantor in fulfilment of the grantor's obligations under the option shall be treated as a single transaction, and accordingly for the purposes of the Capital Gains Tax Acts—

(a) if the option binds the grantor to sell, the consideration for the option shall be part of the consideration for the sale, and

(b) if the option binds the grantor to buy, the consideration for the option shall be deducted from the cost of acquisition incurred by the grantor in buying in pursuance of the grantor's obligations under the option.

(4) The exercise of an option by the person for the time being entitled to exercise it shall not constitute the disposal of an asset for the purposes of the Capital Gains Tax Acts by that person; but, if an option is exercised, the acquisition of the option (whether directly from the grantor or not) and the transaction entered into by the person exercising the option in exercise of that person's rights under the option shall be treated as a single transaction, and accordingly for the purposes of the Capital Gains Tax Acts—

(a) if the option binds the grantor to sell, the cost of acquiring the option shall be part of the cost of acquiring the asset which is sold, and

(b) if the option binds the grantor to buy, the cost of the option shall be treated as a cost incidental to the disposal of the asset which is bought by the grantor of the option.

(5) (a) The abandonment of an option by the person for the time being entitled to exercise it shall constitute the disposal of an asset (being the option) for the purposes of the Capital Gains Tax Acts by that person.

(b) Subject to subsections (7) and (8)(a), the abandonment of an option by the person for the time being entitled to exercise it shall not for the purposes of the Capital Gains Tax Acts give rise to an allowable loss.

(6) In relation to the disposal by means of transfer of an option binding the grantor to sell or buy shares or securities which have a quoted market value on a stock exchange in the State or elsewhere, the option shall be regarded for the purposes of the Capital Gains Tax Acts as a wasting asset the life of which ends when the right to exercise the option ends, or when the option becomes valueless, whichever is the earlier, but without prejudice to the application of the provisions of Chapter 2 of this Part relating to wasting assets to other descriptions of options.

(7) Where an option, being an option to acquire assets exercisable by a person intending to use the assets, if acquired, for the purposes of a trade carried on by that person or which that person commences to carry on within 2 years of that person's acquisition of the option, is disposed of or abandoned, then—

(a) if the option is abandoned, subsection (5)(b) shall not apply, and

(b) section 560(3) shall not apply.

(8) (a) Where—

(i) a quoted option to subscribe for shares in a company, or

(ii) a traded option,

is disposed of or abandoned, then—

(I) if the option is abandoned, subsection (5)(b) shall not apply, and

(II) section 560(3) and subsection (6) shall not apply.

(b) Where a quoted option to subscribe for shares in a company is dealt in within 3 months after the taking effect, with respect to the company granting the option, of any reorganisation, reduction, conversion or amalgamation to which section 584, 585, 586 or 587 applies (or within such longer period as the Revenue Commissioners may by notice in writing allow), the option shall for the purposes of section 584, 585, 586 or 587 be regarded as the shares which could be acquired by exercising the option, and section 548(3) shall apply for determining its market value.

(9) This section shall apply in relation to an option binding the grantor both to sell and to buy as if it were 2 separate options with 50 per cent of the consideration attributed to each option.

(10) This section shall apply in relation to a forfeited deposit of purchase money or other consideration money for a prospective purchase or other transaction which is abandoned as it applies in relation to the consideration for an option which binds the grantor to sell and which is not exercised.

541 Debts. [CGTA75 s46; FA80 s62(b); FA96 s61(1); FA97 s78]

541.—(1) (a) For the purposes of the Capital Gains Tax Acts but subject to paragraph (b), where a person incurs a debt to another person (being the original creditor), whether in Irish currency or in some other currency, no chargeable gain shall accrue to that creditor or to that creditor's personal representative or legatee on a disposal of the debt.

(b) Paragraph (a) shall not apply in the case of a debt on a security within the meaning of section 585.

(2) Subject to subsection (1) and sections 585 and 586, the satisfaction of a debt or part of a debt (including a debt on a security within the meaning of section 585) shall be treated for the purposes of the Capital Gains Tax Acts as a disposal of the debt or of that part by the creditor made at the time when the debt or that part is satisfied.

(3) Where property is acquired by a creditor in satisfaction of the creditor's debt or part of that debt, then, subject to sections 585 and 586, the property shall not be treated for the purposes of the Capital Gains Tax Acts as disposed of by the debtor or acquired by the creditor for a consideration greater than its market value at the time of the creditor's acquisition of it; but, if under subsection (1) (and in a case not within either section 585 or 586) no chargeable gain is to accrue on a disposal of the debt by the original creditor and a chargeable gain accrues to that creditor on a disposal by that creditor of the property, the amount of the chargeable gain shall (where necessary) be reduced so as not to exceed the chargeable gain which would have accrued if that creditor had acquired the property for a consideration equal to the amount of the debt or that part of the debt.

(4) For the purposes of the Capital Gains Tax Acts, a loss accruing on the disposal of a debt acquired by the person making the disposal from the original creditor or the original creditor's personal representative or legatee at a time when the creditor or the creditor's personal representative or legatee is a person connected with the person making the disposal, and so acquired either directly or by one or more than one purchase through persons all of whom are connected with the person making the disposal, shall not be an allowable loss.

(5) Where the original creditor is a trustee and the debt when created is settled property, subsections (1) and (4) shall apply as if for the references to the original creditor's personal representative or legatee there were substituted references to any person becoming absolutely entitled as against the trustee to the debt on its ceasing to be settled property and to that person's personal representative or legatee.

(6) This section shall not apply to a debt owed by a bank which is not in Irish currency and which is represented by a sum standing to the credit of a person in an account in the bank, unless it represents currency acquired by the holder for the personal expenditure outside the State of the holder or his or her family or dependants (including expenditure on the maintenance of any residence outside the State).

(7) For the purposes of this section, a debenture issued by any company shall be deemed to be a security (within the meaning of section 585) if it is issued—

(a) on a reorganisation referred to in section 584(2) or in pursuance of the debenture's allotment on any such reorganisation,

(b) in exchange for shares in or debentures of another company where the requirements of section 586(2) are satisfied in relation to the exchange,

(d) in connection with any transfer of assets referred to in section 631,

(e) in connection with any disposal of assets referred to in section 632,

(f) in the course of a transaction which is the subject of an application under section 637, or

(g) in pursuance of rights attached to any debenture within paragraph (a), (b), (c), (d), (e) or (f).

(8) Paragraphs (d), (e) and (f), and (in so far as it relates to debentures within those paragraphs) paragraph (g), of subsection (7) shall apply as respects the disposal of a debenture on or after the 26th day of March, 1997.

542 Time of disposal and acquisition. [CGTA75 s10(1) and (3)]

542.—(1) (a) Subject to paragraph (b) and subsection (2), for the purposes of the Capital Gains Tax Acts, where an asset is disposed of and acquired under a contract, the time at which the disposal and acquisition is made shall be the time at which the contract is made(and not, if different, the time at which the asset is conveyed or transferred).

(b) Where the contract is conditional (and in particular where it is conditional on the exercise of an option), the time at which the disposal and acquisition is made shall be the time at which the condition is satisfied.

(c) For the purposes of the Capital Gains Tax Acts, where an interest in land is acquired, otherwise than under a contract, by an authority possessing compulsory purchase powers, the time at which the disposal and acquisition is made shall be the time at which the compensation for the acquisition is agreed or otherwise determined (variations on appeal being disregarded for this purpose) or, if earlier, the time at which the authority enters on the land in pursuance of its powers.

(2) For the purposes of subparagraphs (i) to (iv) of section 535(2)(a), the time of disposal shall be the time at which any capital sum is received.

543 Transfers of value derived from assets. [CGTA75 s45]

543.—(1) Without prejudice to the generality of the provisions of the Capital Gains Tax Acts as to the transactions which are disposals of assets, any transaction which under this section is to be treated as a disposal of an asset—

(a) shall be so treated (with a corresponding acquisition of an interest in the asset) notwithstanding that there is no consideration, and

(b) in so far as, on the assumption that the parties to the transaction were at arm's length, the party making the disposal could have obtained consideration or additional consideration for the disposal, shall be treated as not being at arm's length, and the consideration so obtainable, added to the consideration actually passing, shall be treated as the market value of what is acquired.

(2) (a) Where a person having control of a company exercises that control so that value passes out of shares in the company owned by such person or a person with whom such person is connected, or out of rights over the company exercisable by such person or by a person with whom such person is connected, and passes into other shares in or rights over the company, that exercise of such person's control shall be a disposal of the shares or rights out of which the value passes by the person by whom they were owned or exercisable.

(b) References in paragraph (a) to a person include references to 2 or more persons connected with one another.

(3) Where, after a transaction which results in the owner of land or of any other description of property becoming the lessee of the property, there is any adjustment of the rights and liabilities under the lease (whether or not involving the grant of a new lease) which as a whole is favourable to the lessor, that shall constitute a disposal by the lessee of an interest in the property.

(4) Where an asset is subject to any description of right or restriction, the extinction or abrogation in whole or in part of the right or restriction by the person entitled to enforce it shall constitute a disposal by that person of the right or restriction.

CHAPTER 2 Computation of chargeable gains and allowable losses

544 Interpretation and general (Chapter 2). [CGTA75 s51(2), Sch1 pars1 and 5(3) and Sch4 par13; CGT(A)A78 s17 and Sch2]

544.—(1) In this Chapter, “renewals allowance” means a deduction allowable in computing profits, gains or losses for the purposes of the Income Tax Acts by reference to the cost of acquiring an asset in replacement of another asset, and for the purposes of this Chapter a renewals allowance shall be regarded as a deduction allowable in respect of the expenditure incurred on the asset which is being replaced.

(2) References in this Chapter to sums taken into account as receipts or as expenditure in computing profits, gains or losses for the purposes of the Income Tax Acts shall include references to sums which would be so taken into account but for the fact that any profits or gains of a trade, profession or employment are not chargeable to income tax or that losses are not allowable for those purposes.

(3) References in this Chapter to income or profits charged or chargeable to tax include references to income or profits taxed or, as the case may be, taxable by deduction at source.

(4) No deduction shall be allowable in a computation under the Capital Gains Tax Acts more than once from any sum or from more than one sum.

(5) For the purposes of any computation under this Chapter of a gain accruing on a disposal, any necessary apportionment shall be made of any consideration or of any expenditure, and the method of apportionment adopted shall, subject to this Chapter, be such method as appears to the inspector or on appeal the Appeal Commissioners to be just and reasonable.

(6) Section 557 and the other provisions of the Capital Gains Tax Acts for apportioning on a part disposal expenditure which is deductible in computing a gain shall be operated before the operation of and without regard to—

(a) section 1028(5),

(b) section 597, and

(7) Any assessment to income tax or any decision on a claim under the Income Tax Acts, and any decision on an appeal under the Income Tax Acts against such an assessment or decision, shall be conclusive in so far as under any provision of the Capital Gains Tax Acts liability to tax depends on the provisions of the Income Tax Acts.

(8) In so far as the provisions of the Capital Gains Tax Acts require the computation of a gain by reference to events before the 6th day of April, 1974, all those provisions, including the provisions fixing the amount of the consideration deemed to be given on a disposal or an acquisition, shall apply except in so far as expressly excluded.

545 Chargeable gains. [CGTA75 s7(2) and s11; CGT(A)A78 s17 and Sch2]

545.—(1) Where under the Capital Gains Tax Acts an asset is not a chargeable asset, no chargeable gain shall accrue on its disposal.

(2) The amount of the gain accruing on the disposal of an asset shall be computed in accordance with this Chapter, and subject to the other provisions of the Capital Gains Tax Acts.

(3) Except where otherwise expressly provided by the Capital Gains Tax Acts, every gain shall be a chargeable gain.

546 Allowable losses. [CGTA75 s7(2) and s12(1), (2), (6) and (7); CGT(A)A78 s16 and Sch1 par7]

546.—(1) Where under the Capital Gains Tax Acts an asset is not a chargeable asset, no allowable loss shall accrue on its disposal.

(2) Except where otherwise expressly provided, the amount of a loss accruing on a disposal of an asset shall be computed in the same way as the amount of a gain accruing on a disposal is computed.

(3) Except where otherwise expressly provided, the provisions of the Capital Gains Tax Acts which distinguish gains which are chargeable gains from those which are not, or which make part of a gain a chargeable gain and part not, shall apply also to distinguish losses which are allowable losses from those which are not, and to make part of a loss an allowable loss and part not, and references in the Capital Gains Tax Acts to an allowable loss shall be construed accordingly.

(4) A loss accruing to a person in a year of assessment for which the person is neither resident nor ordinarily resident in the State shall not be an allowable loss for the purposes of the Capital Gains Tax Acts unless under section 29(3) the person would be chargeable to capital gains tax in respect of a chargeable gain if there had been a gain instead of a loss on that occasion.

(5) Except where provided by section 573, an allowable loss accruing in a year of assessment shall not be allowable as a deduction from chargeable gains in any earlier year of assessment, and relief shall not be given under the Capital Gains Tax Acts—

(a) more than once in respect of any loss or part of a loss, and

(b) if and in so far as relief has been or may be given in respect of that loss or part of a loss under the Income Tax Acts.

(6) For the purposes of section 31, where, on the assumption that there were no allowable losses to be deducted under that section, a person would be chargeable under the Capital Gains Tax Acts at more than one rate of tax for a year of assessment, any allowable losses to be deducted under that section shall be deducted—

(a) if the person would be so chargeable at 2 different rates, from the chargeable gains which would be so chargeable at the higher of those rates and, in so far as they cannot be so deducted, from the chargeable gains which would be so chargeable at the lower of those rates, and

(b) if the person would be so chargeable at 3 or more rates, from the chargeable gains which would be so chargeable at the highest of those rates and, in so far as they cannot be so deducted, from the chargeable gains which would be so chargeable at the next highest of those rates, and so on.

547 Disposals and acquisitions treated as made at market value. [CGTA75 s9; FA82 s62; FA92 s62]

547.—(1) Subject to the Capital Gains Tax Acts, a person's acquisition of an asset shall for the purposes of those Acts be deemed to be for a consideration equal to the market value of the asset where—

(a) the person acquires the asset otherwise than by means of a bargain made at arm's length (including in particular where the person acquires it by means of a gift),

(b) the person acquires the asset by means of a distribution from a company in respect of shares in the company, or

(i) for a consideration that cannot be valued,

(ii) in connection with the person's own or another person's loss of office or employment or diminution of emoluments, or

(iii) otherwise in consideration for or in recognition of the person's or another person's services or past services in any office or employment or of any other service rendered or to be rendered by the person or another person.

(2) (a) In this subsection, “shares” includes stock, debentures and any interests to which section 587(3) applies and any option in relation to such shares, and references in this subsection to an allotment of shares shall be construed accordingly.

(b) Notwithstanding subsection (1) and section 584(3), where a company, otherwise than by means of a bargain made at arm's length, allots shares in the company (in this subsection referred to as “the new shares”) to a person connected with the company, the consideration which the person gives or becomes liable to give for the new shares shall for the purposes of the Capital Gains Tax Acts be deemed to be an amount (including a nil amount) equal to the lesser of—

(i) the amount or value of the consideration given by the person for the new shares, and

(ii) the amount by which the market value of the shares in the company which the person held immediately after the allotment of the new shares exceeds the market value of the shares in the company which the person held immediately before the allotment or, if the person held no such shares immediately before the allotment, the market value of the new shares immediately after the allotment.

(3) Subsection (1) shall not apply to the acquisition of an asset where—

(a) there is no corresponding disposal of the asset, and

(b) (i) there is no consideration in money or money's worth for the asset, or

(ii) the consideration for the asset is of an amount or value which is lower than the market value of the asset.

(4) (a) Subject to the Capital Gains Tax Acts, a person's disposal of an asset shall for the purposes of those Acts be deemed to be for a consideration equal to the market value of the asset where—

(i) the person disposes of the asset otherwise than by means of a bargain made at arm's length (including in particular where the person disposes of it by means of a gift), or

(ii) the person disposes of the asset wholly or partly for a consideration that cannot be valued.

(b) Paragraph (a) shall not apply to a disposal by means of a gift made before the 20th day of December, 1974, and any loss incurred on a disposal by means of a gift made before that date shall not be an allowable loss.

548 Valuation of assets. [CGTA75 s49(1) to (6); CTA76 s140(2) and Sch2 PtII par7]

548.—(1) Subject to this section, in the Capital Gains Tax Acts, “market value”, in relation to any assets, means the price which those assets might reasonably be expected to fetch on a sale in the open market.

(2) In estimating the market value of any assets, no reduction shall be made in the estimate on account of the estimate being made on the assumption that the whole of the assets is to be placed on the market at the same time.

(3) (a) The market value of shares or securities quoted on a stock exchange in the State or in the United Kingdom shall, except where in consequence of special circumstances the prices quoted are by themselves not a proper measure of market value, be as follows—

(i) in relation to shares or securities listed in the Stock Exchange Official List-Irish—

(I) the price shown in that list at which bargains in the shares or securities were last recorded (the previous price), or

(II) where bargains other than bargains done at special prices were recorded in that list for the relevant date, the price at which the bargains were so recorded or, if more than one such price was so recorded, a price halfway between the highest and the lowest of such prices,

taking the amount under clause (I) if less than under clause (II) or if no such business was recorded on the relevant date, and taking the amount under clause (II) if less than under clause (I), and

(ii) in relation to shares or securities listed in the Stock Exchange Daily Official List—

(I) the lower of the 2 prices shown in the quotations for the shares or securities on the relevant date plus 25 per cent of the difference between those 2 figures, or

taking the amount under clause (I) if less than under clause (II) or if no such bargains were recorded for the relevant date, and taking the amount under clause (II) if less than under clause (I).

(b) Notwithstanding paragraph (a)—

(i) where the shares or securities are listed in both of the Official Lists referred to in that paragraph for the relevant date, the lower of the 2 amounts as ascertained under subparagraphs (i) and (ii) of that paragraph shall be taken,

(ii) this subsection shall not apply to shares or securities for which some other stock exchange affords a more active market, and

(iii) if the stock exchange concerned, or one of the stock exchanges concerned, is closed on the relevant date, the market value shall be ascertained by reference to the latest previous date or earliest subsequent date on which it is open, whichever affords the lower market value.

(4) Where shares and securities are not quoted on a stock exchange at the time at which their market value is to be determined by virtue of subsection (1), it shall be assumed for the purposes of such determination that in the open market which is postulated for the purposes of subsection (1) there is available to any prospective purchaser of the asset in question all the information which a prudent prospective purchaser of the asset might reasonably require if such prospective purchaser were proposing to purchase it from a willing vendor by private treaty and at arm's length.

(5) In the Capital Gains Tax Acts, “market value”, in relation to any rights of unit holders in any unit trust (including any unit trust legally established outside the State) the buying and selling prices of which are published regularly by the managers of the trust, means an amount equal to the buying price (that is, the lower price) so published on the relevant date or, if none was published on that date, on the latest date before that date.

(6) If and in so far as any appeal against an assessment to capital gains tax or against a decision on a claim under the Capital Gains Tax Acts involves the question of the value of any shares or securities in a company resident in the State, other than shares or securities quoted on a stock exchange, that question shall be determined in the like manner as an appeal against an assessment made on the company.

(7) Subsection (6) shall apply for the purposes of corporation tax as it applies for the purposes of capital gains tax.

549 Transactions between connected persons. [CGTA75 s33(1) to (6); FA89 s87]

549.—(1) This section shall apply for the purposes of the Capital Gains Tax Acts where a person acquires an asset and the person making the disposal is connected with the person acquiring the asset.

(2) Without prejudice to the generality of section 547, the person acquiring the asset and the person making the disposal shall be treated as parties to a transaction otherwise than by means of a bargain made at arm's length.

(3) Where on the disposal a loss accrues to the person making the disposal, the loss shall not be deductible except from a chargeable gain accruing to that person on some other disposal of an asset to the person acquiring the asset mentioned in subsection (1), being a disposal made at a time when they are connected persons.

(4) Subsection (3) shall not apply to a disposal by means of a gift in settlement if the gift and the income from it are wholly or primarily applicable for educational, cultural or recreational purposes, and the persons benefiting from the application for those purposes are confined to members of an association of persons for whose benefit the gift was made, not being persons all or most of whom are connected persons.

(5) Where the asset mentioned in subsection (1) is an option to enter into a sale or other transaction given by the person making the disposal, a loss accruing to a person acquiring the asset shall not be an allowable loss unless it accrues on a disposal of the option at arm's length to a person not connected with the person acquiring the asset.

(6) Where the asset mentioned in subsection (1) is subject to any right or restriction enforceable by the person making the disposal or by a person connected with that person, then (where the amount of the consideration for the acquisition is in accordance with subsection (2) deemed to be equal to the market value of the asset), that market value shall be what its market value would be if not subject to the right or restriction, reduced by the lesser of—

(a) the market value of the right or restriction, and

(b) the amount by which its extinction would enhance the value of the asset to its owner.

(7) Where the right or restriction referred to in subsection (6)—

(a) is of such a nature that its enforcement would or might effectively destroy or substantially impair the value of the asset without bringing any countervailing advantage either to the person making the disposal or a person connected with that person,

(b) is an option or other right to acquire the asset, or

(c) in the case of incorporeal property, is a right to extinguish the asset in the hands of the person giving the consideration by forfeiture or merger or otherwise,

then, the market value of the asset shall be determined, and the amount of the gain accruing on the disposal shall be computed, as if the right or restriction did not exist.

(8) (a) Where a person disposes of an asset to another person in such circumstances that—

(i) subsection (7) would but for this subsection apply in determining the market value of the asset, and

(ii) the person is not chargeable to capital gains tax under section 29 or 30 in respect of any gain accruing on the person's disposal of the asset,

then, as respects any subsequent disposal of the asset by the other person, that other person's acquisition of the asset shall for the purposes of the Capital Gains Tax Acts be deemed to be for an amount equal to the market value of the asset determined as if subsection (7) had not been enacted.

(b) This subsection shall apply—

(i) to disposals made on or after the 25th day of January, 1989, and

(ii) for the purposes of the determination of any deduction to be made from a chargeable gain accruing on or after the 25th day of January, 1989, in respect of an allowable loss, notwithstanding that the loss accrued or but for this section would have accrued on a disposal made before that day.

(9) Subsections (6) and (7) shall not apply to a right of forfeiture or other right exercisable on breach of a covenant contained in a lease of land or other property, or to any right or restriction under a mortgage or other charge.

550 Assets disposed of in series of transactions. [CGTA75 s34]

550.—Where a person is given, or acquires from one or more persons with whom such person is connected, by means of 2 or more transactions, assets of which the aggregate market value, when considered separately in relation to the separate other transactions, is less than the aggregate market value of those assets when considered together, then, for the purposes of the Capital Gains Tax Acts, the market value of the assets where relevant shall be taken to be the larger market value and that value shall be apportioned rateably to the respective disposals.

551 Exclusion from consideration for disposals of sums chargeable to income tax. [CGTA75 s51(1) and Sch1 par2; CTA76 s140(2) and Sch2 PtII par8]

551.—(1) In this section, “rent” includes any rent charge, fee farm rent and any payment in the nature of a rent.

(2) There shall be excluded from the consideration for a disposal of an asset taken into account in the computation under this Chapter of the gain accruing on that disposal any money or money's worth charged to income tax as income of, or taken into account as a receipt in computing income, profits, gains or losses for the purposes of the Income Tax Acts of, the person making the disposal; but the exclusion from consideration under this subsection shall not be taken as applying to a computation in accordance with Case I of Schedule D for the purpose of restricting relief in respect of expenses of management under section 707.

(3) Subsection (2) shall not be taken as excluding from the consideration so taken into account any money or money's worth taken into account in the making of a balancing charge under Part 9 or under Chapter 1 of Part 29.

(4) This section shall not preclude the taking into account in a computation under this Chapter of the gain, as consideration for the disposal of an asset, of the capitalised value of a rent (as in a case where rent is exchanged for some other asset), or of a right of any other description to income or to payments in the nature of income over a period, or to a series of payments in the nature of income.

552 Acquisition, enhancement and disposal costs. [CGTA75 s51(1) and Sch1 par3(1) to (5); CTA76 s140(2) and Sch2 PtII par9]

552.—(1) Subject to the Capital Gains Tax Acts, the sums allowable as a deduction from the consideration in the computation under this Chapter of the gain accruing to a person on the disposal of an asset shall be restricted to—

(a) the amount or value of the consideration in money or money's worth given by the person or on the person's behalf wholly and exclusively for the acquisition of the asset, together with the incidental costs to the person of the acquisition or, if the asset was not acquired by the person, any expenditure wholly and exclusively incurred by the person in providing the asset,

(b) the amount of any expenditure wholly and exclusively incurred on the asset by the person or on the person's behalf for the purpose of enhancing the value of the asset, being expenditure reflected in the state or nature of the asset at the time of the disposal, and any expenditure wholly and exclusively incurred by the person in establishing, preserving or defending the person's title to, or to a right over, the asset, and

(2) For the purposes of the Capital Gains Tax Act as respects the person making the disposal, the incidental costs to the person of the acquisition of the asset or of its disposal shall consist of expenditure wholly and exclusively incurred by that person for the purposes of the acquisition or, as the case may be, the disposal, being fees, commission or remuneration paid for the professional services of any surveyor, valuer, auctioneer, accountant, agent or legal advisor and costs of transfer or conveyance (including stamp duty), together with—

(a) in the case of the acquisition of an asset, costs of advertising to find a seller, and

(b) in the case of a disposal, costs of advertising to find a buyer and costs reasonably incurred in making any valuation or apportionment required for the purposes of the computation under this Chapter of the gain, including in particular expenses reasonably incurred in ascertaining market value where required by the Capital Gains Tax Acts.

(3) (a) Where—

(i) a company incurs expenditure on the construction of any building, structure or works, being expenditure allowable as a deduction under subsection (1) in computing a gain accruing to the company on the disposal of the building, structure or works, or of any asset comprising the building, structure or works,

(ii) that expenditure was defrayed out of borrowed money,

(iii) the company charged to capital all or any part of the interest on that borrowed money referable to a period ending on or before the disposal, and

(iv) the company is chargeable to capital gains tax in respect of the gain, then, the sums so allowable under subsection (1) shall include the amount of that interest charged to capital except in so far as such interest has been taken into account for the purposes of relief under the Income Tax Acts, or could have been so taken into account but for an insufficiency of income or profits or gains.

(b) Subject to paragraph (a), no payment of interest shall be allowable as a deduction under this section.

(4) Without prejudice to section 554, there shall be excluded from the sums allowable as a deduction under this section any premium or other payment made under a policy of insurance of the risk of any kind of damage or injury to, or loss or depreciation of, the asset.

(5) In the case of a gain accruing to a person on the disposal of, or of a right or interest in or over, an asset to which the person became absolutely entitled as legatee or as against the trustees of settled property—

(a) any expenditure within subsection (2) incurred by the person in relation to the transfer of the asset to the person by the personal representatives or trustees, and

(b) any such expenditure incurred in relation to the transfer of the asset by the personal representatives or trustees,

shall be allowable as a deduction under this section.

553 Interest charged to capital. [CTA76 s128]

553.—Where—

(a) a company incurs expenditure on the construction of any building, structure or works, being expenditure allowable as a deduction under section 552 in computing a gain accruing to the company on the disposal of the building, structure or works, or of any asset comprising the building, structure or works,

(b) that expenditure was defrayed out of borrowed money, and

(c) the company charged to capital all or any of the interest on that borrowed money referable to a period or part of a period ending on or before the disposal,

then, the sums so allowable shall, notwithstanding section 552(3)(b), include the amount of that interest charged to capital.

554 Exclusion of expenditure by reference to income tax. [CGTA75 s51(1) and Sch1 par4]

554.—(1) There shall be excluded from the sums allowable under section 552 as a deduction any expenditure allowable as a deduction in computing the profits or gains or losses of a trade or profession for the purposes of income tax or allowable as a deduction in computing any other income or profits or gains or losses for the purposes of the Income Tax Acts and any expenditure which, although not so allowable as a deduction in computing any losses, would be so allowable but for an insufficiency of income or profits or gains, and this subsection shall apply irrespective of whether effect is or would be given to the deduction in computing the amount of tax chargeable or by discharge or repayment of tax or in any other way.

(2) Without prejudice to subsection (1), there shall be excluded from the sums allowable under section 552 as a deduction any expenditure which, if the assets or all the assets to which the computation relates were, and had at all times been, held or used as part of the fixed capital of a trade the profits or gains of which were chargeable to income tax, would be allowable as a deduction in computing the profits or gains or losses of the trade for the purposes of the Income Tax Acts.

555 Restriction of losses by reference to capital allowances and renewals allowances. [CGTA75 s51(1) and Sch1 par 5(1), (2) and (4)]

555.—(1) Section 554 shall not require the exclusion from the sums allowable as a deduction under section 552 of any expenditure as being expenditure in respect of which a capital allowance or renewals allowance is made but, in the computation of the amount of a loss accruing to the person making the disposal, there shall be excluded from the sums allowable as a deduction any expenditure to the extent to which any capital allowance or renewals allowance has been or may be made in respect of that expenditure.

(2) Where the person making the disposal acquired the asset—

(a) by a transfer to which section 289(6) or 295 applies, or

(b) by a transfer by means of a sale in relation to which an election under section 312(5) was made,

then, this section shall apply as if any capital allowance made to the transferor in respect of the asset had (except in so far as any loss to the transferor was restricted under those sections) been made to the person making the disposal (being the transferee) and, where the transferor acquired the asset by such a transfer, capital allowances which by virtue of this subsection may be taken into account in relation to the transferor shall also be taken into account in relation to the transferee, and so on for any series of transfers before the disposal.

(3) The amount of capital allowances to be taken into account under this section in relation to a disposal includes any allowances to be made by reference to the event which is the disposal, and there shall be deducted from the amount of the allowances the amount of any balancing charge to which effect has been or is to be given by reference to the event which is the disposal, or any earlier event, and of any balancing charge to which effect might have been so given but for the making of an election under section 290.

556 Adjustment of allowable expenditure by reference to consumer price index. [CGT(A)A78 s3, s16 and Sch1 par1; S.I. No. 157 of 1997]

556.—(1) In this section—

“the consumer price index number” means the All Items Consumer Price Index Number compiled by the Central Statistics Office;

“the consumer price index number relevant to any year of assessment” means the consumer price index number at the mid-February before the commencement of that year expressed on the basis that the consumer price index at mid-November, 1968, was 100.

(2) (a) For the purposes of computing the chargeable gain accruing to a person on the disposal of an asset, each sum (in this section referred to as “deductible expenditure”) allowable as a deduction from the consideration for the disposal under paragraphs (a) and (b) of section 552(1) shall be adjusted by multiplying it by the figure (in this section referred to as “the multiplier”) specified in subsection (5) or determined under subsection (6), as the case may be.

(b) This subsection shall not apply in relation to deductible expenditure where the person making the disposal had incurred the expenditure in the period of 12 months ending on the date of the disposal.

(3) For the purposes of the Capital Gains Tax Acts, it shall be assumed that an asset held by a person on the 6th day of April, 1974, was sold and immediately reacquired by such person on that date, and there shall be deemed to have been given by such person as consideration for the reacquisition an amount equal to the market value of the asset at that date.

(4) Subsections (2) and (3) shall not apply in relation to the disposal of an asset if as a consequence of the application of those subsections—

(a) a gain would accrue on that disposal to the person making the disposal and either a smaller gain or a loss would so accrue if those subsections did not apply, or

(b) a loss would so accrue and either a smaller loss or a gain would accrue if those subsections did not apply,

and accordingly, in a case to which paragraph (a) or (b) applies, the amount of the gain or loss accruing on the disposal shall be computed without regard to subsections (2) and (3); but, in a case where this subsection would otherwise substitute a loss for a gain or a gain for a loss, it shall be assumed in relation to the disposal that the relevant asset was acquired by the owner for a consideration such that neither a gain nor a loss accrued to the owner on making the disposal.

(5) In relation to the disposal of an asset made in the year 1997-98, the multiplier shall be the figure mentioned in column (2) of the Table to this subsection opposite the mention in column (1) of that Table of the year of assessment in which the deductible expenditure was incurred.

TABLE

Year of assessment in which deductible expenditure incurred	Multiplier
(1)	(2)
1974-75	6.112
1975-76	4.936
1976-77	4.253
1977-78	3.646
1978-79	3.368
1979-80	3.039
1980-81	2.631
1981-82	2.174
1982-83	1.829
1983-84	1.627
1984-85	1.477
1985-86	1.390
1986-87	1.330
1987-88	1.285
1988-89	1.261
1989-90	1.221
1990-91	1.171
1991-92	1.142
1992-93	1.101
1993-94	1.081
1994-95	1.063
1995-96	1.037
1996-97	1.016

(6) (a) The Revenue Commissioners shall make regulations specifying the multipliers, determined in accordance with paragraph (b), in relation to the disposal of an asset made in the year 1998-99 and shall make corresponding regulations in relation to the disposal of an asset made in each subsequent year of assessment.

(b) The multiplier, in relation to the disposal of an asset made in the year 1998-99 or any subsequent year of assessment, shall be the quotient, rounded up to 3 decimal places, obtainable by dividing the consumer price index number relevant to the year of assessment in which the disposal is made by the consumer price index number relevant to the year of assessment in which the deductible expenditure was incurred.

(7) Every regulation made under this section shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next 21 days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

(8) A capital sum which under section 536(1)(a) is to be deducted from any expenditure allowable as a deduction in computing a gain on the disposal of an asset shall be deducted from the sum applied in restoring the asset before subsection (2) is applied to the residue, if any, of that sum.

(9) An amount determined in accordance with subsection (3) in respect of an asset shall be reduced by any expenditure within section 565 which relates to the asset and which was incurred before the 6th day of April, 1974, and subsection (2) shall apply to the residue of that amount.

557 Part disposals. [CGTA75 s51(1) and Sch1 par6]

557.—(1) Where a person disposes of an interest or rights in or over an asset and, generally wherever on the disposal of an asset, any description of property derived from that asset remains undisposed of, the sums which under paragraphs (a) and (b) of section 552(1) are attributable to the asset shall be apportioned both for the purposes of the computation under this Chapter of the gain accruing on the disposal and for the purpose of applying this Chapter in relation to the property which remains undisposed of.

(2) Such portion of the expenditure shall be allowable as a deduction in computing under this Chapter the amount of the gain accruing on the disposal as bears the same proportion to the total of those sums as the value of the consideration for the disposal bears to the aggregate of that value and the market value of the property which remains, and the balance of the expenditure shall be attributed to the property which remains undisposed of.

(3) Any apportionment to be made in pursuance of this section shall be made before the operation of section 555 and, if after a part disposal there is a subsequent disposal of an asset, the capital allowances or renewals allowances to be taken into account in pursuance of that section in relation to the subsequent disposal shall, subject to subsection (4), be those referable to the sums which under paragraphs (a) and (b) of section 552(1) are attributable to the asset whether before or after the part disposal, but those allowances shall be reduced by the amount (if any) by which the loss on the earlier disposal was restricted under that section.

(4) This section shall not be taken as requiring the apportionment of any expenditure which on the facts is wholly attributable to the asset or part of the asset which is disposed of or wholly attributable to the asset or part of the asset which remains undisposed of.

558 Part disposals before 6th day of April, 1978. [CGT(A)A78 s16 and Sch1 par10(1) and (2)]

558.—(1) Where on or after the 6th day of April, 1974, but before the 6th day of April, 1978, a person made a disposal (to which paragraph 6 of Schedule 1 to the Capital Gains Tax Act, 1975, applied) of an asset held by such person on the 6th day of April, 1974, and—

(a) the amount of the chargeable gain which accrued on that disposal was determined under paragraph 18 of Schedule 1 to the Capital Gains Tax Act, 1975, and

(b) any property derived from that asset remained undisposed of on the 6th day of April, 1978,

then, for the purpose of determining the balance of the expenditure which under section 557 is to be attributed to the property which remains undisposed of, it shall be assumed that on the disposal the amount of the chargeable gain referred to in paragraph (a) had been determined, not under paragraph 18 of Schedule 1 to the Capital Gains Tax Act, 1975, but on the assumption that the asset was disposed of and immediately reacquired by the person on the 6th day of April, 1974.

(2) Where on or after the 6th day of April, 1974, but before the 6th day of April, 1978, a person made a disposal (to which paragraph 6 of Schedule 1 to the Capital Gains Tax Act, 1975, applied) of an asset acquired by such person on a death which occurred on or after the 6th day of April, 1974, and—

(a) the amount of the chargeable gain which accrued on that disposal was determined on the basis that the asset had been acquired by such person on a date earlier than the date of that death, and

(b) any property derived from that asset remained undisposed of on the 6th day of April, 1978,

then, notwithstanding subsection (1), for the purpose of determining the balance of the expenditure which under section 557 is to be attributed to the property which remains undisposed of, it shall be assumed that on the disposal the amount of the chargeable gain referred to in paragraph (a) had been determined as if section 14(1) of the Capital Gains Tax Act, 1975 (as amended by section 6 of the Capital Gains Tax (Amendment) Act, 1978) or, as the case may be, section 15(4)(b) of the Capital Gains Tax Act, 1975 (as amended by section 7 of the Capital Gains Tax (Amendment) Act, 1978) had applied at the date of that disposal.

559 Assets derived from other assets. [CGTA75 s51(1) and Sch1 par7]

559.—(1) If and in so far as, in a case where assets have been merged or divided or have changed their nature, or rights or interests in or over assets have been created or extinguished, the value of an asset is derived from any other asset in the same ownership, an appropriate proportion of the sums allowable as a deduction in respect of the other asset under paragraphs (a) and (b) of section 552(1) shall, both for the purpose of the computation of a gain accruing on the disposal of the first-mentioned asset and, if the other asset remains in existence, on a disposal of that other asset, be attributed to the first-mentioned asset.

(2) The appropriate proportion shall be computed by reference to the market value at the time of disposal of the assets (including rights or interests in or over the assets) which have not been disposed of and the consideration received in respect of the assets (including rights or interests in or over the assets) disposed of.

560 Wasting assets. [CGTA75 s51(1) and Sch1 pars 8 and 9]

560.—(1) In this Chapter—

“the residual or scrap value”, in relation to a wasting asset, means the predictable value, if any, which the wasting asset will have at the end of its predictable life as estimated in accordance with this section;

“wasting asset” means an asset with a predictable life not exceeding 50 years, but so that—

(a) freehold land shall not be a wasting asset whatever its nature and whatever the nature of the buildings or works on that land,

(b) “life”, in relation to any tangible movable property, means useful life, having regard to the purpose for which the tangible assets were acquired or provided by the person making the disposal,

(c) plant and machinery shall in every case be regarded as having a predictable life of less than 50 years, and in estimating that life it shall be assumed that its life will end when it is finally put out of use as being unfit for further use and that it will be used in the normal manner and to the normal extent and will be so used throughout its life as so estimated, and

(d) a life interest in settled property shall not be a wasting asset until the predictable expectation of life of the life tenant is 50 years or less, and the predictable life of life interests in settled property and of annuities shall be ascertained from actuarial tables approved by the Revenue Commissioners.

(2) The question as to what is the predictable life of an asset, and the question as to what is its predictable residual or scrap value, if any, at the end of that life, shall, in so far as those questions are not immediately answered by the nature of the asset, be taken in relation to any disposal of the asset as they were known or ascertainable at the time when the asset was acquired or provided by the person making the disposal.

(3) In the computation under this Chapter of the gain accruing on the disposal of a wasting asset, it shall be assumed—

(a) that any expenditure attributable to the asset under section 552(1)(a), after deducting the residual or scrap value, if any, of the asset, is written off at a uniform rate from its full amount at the time when the asset is acquired or provided to nil at the end of its life, and

(b) that any expenditure attributable to the asset under section 552(1)(b) is written off at a uniform rate from the full amount of that expenditure at the time when that expenditure is first reflected in the state or nature of the asset to nil at the end of its life.

(4) Where any expenditure attributable to the asset under section 552(1) (b) creates or increases a residual or scrap value of the asset, the residual or scrap value to be deducted under subsection (3)(a) shall be the residual or scrap value so created or increased.

(5) Any expenditure written off under this section shall not be allowable as a deduction under section 552.

561 Wasting assets qualifying for capital allowances. [CGTA75 s51(1) and Sch1 par10]

561.—(1) Subsections (3) to (5) of section 560 shall not apply in relation to a disposal of an asset—

(a) which, from the beginning of the period of ownership of the person making the disposal to the time when the disposal is made, is used solely for the purposes of a trade or profession and in respect of which that person has claimed or could have claimed any capital allowance in respect of any expenditure attributable to the asset under paragraph (a) or (b) of section 552(1), or

(b) on which the person making the disposal has incurred any expenditure which has otherwise qualified in full for any capital allowance.

(2) In the case of the disposal of an asset which in the period of ownership of the person making the disposal has been used partly for the purposes of a trade or profession and partly for other purposes, or has been used for the purposes of a trade or profession for part of that period, or which has otherwise qualified in part only for capital allowances—

(a) the consideration for the disposal and any expenditure attributable to the asset under paragraph (a) or (b) of section 552(1) shall be apportioned by reference to the extent to which that expenditure qualified for capital allowances,

(b) the computation under this Chapter of the gain on the disposal shall be made separately in relation to the apportioned parts of the expenditure and consideration,

(c) subsections (3) to (5) of section 560 shall not apply for the purposes of the computation in relation to the part of the consideration apportioned to use for the purposes of the trade or profession or to the expenditure qualifying for capital allowances,

(d) if an apportionment of the consideration for the disposal has been made for the purposes of making any capital allowance to the person making the disposal or for the purpose of making any balancing charge on that person, that apportionment shall be employed for the purposes of this section, and

(e) subject to paragraph (d), the consideration for the disposal shall be apportioned for the purposes of this section in the same proportions as the expenditure attributable to the asset is apportioned under paragraph (a).

562 Contingent liabilities. [CGTA75 s51(1) and Sch1 par11]

562.—(1) No allowance shall be made under section 552—

(a) in the case of a disposal by means of assigning a lease of land or other property, for any liability remaining with or assumed by the person making the disposal by means of assigning the lease which is contingent on a default in respect of liabilities thereby or subsequently assumed by the assignee under the terms and conditions of the lease;

(b) for any contingent liability of the person making the disposal in respect of any covenant for quiet enjoyment or other obligation assumed—

(i) as vendor of land or of any estate or interest in land,

(ii) as a lessor, or

(iii) as grantor of an option binding that person to sell land or an interest in land or to grant a lease of land;

(c) for any contingent liability in respect of a warranty or representation made on a disposal by means of a sale or lease of any property other than land.

(2) Where it is shown to the satisfaction of the inspector that any contingent liability mentioned in subsection (1) has become enforceable and is being or has been enforced, such adjustment, whether by means of discharge or repayment of tax or otherwise, shall be made as may be necessary.

563 Consideration due after time of disposal. [CGTA75 s44(2); CTA76 s140(2) and Sch2 PtII par6]

563.—(1) (a) In the computation of a chargeable gain, consideration for the disposal shall be taken into account without any discount for postponement of the right to receive any part of the consideration and without regard to a risk of any part of the consideration being irrecoverable or to the right to receive any part of the consideration being contingent.

(b) Where any part of the consideration taken into account in accordance with paragraph (a) is shown to the satisfaction of the inspector to be irrecoverable, such adjustment, whether by means of discharge or repayment of tax or otherwise, shall be made as the case may require.

(2) Subsection (1) shall apply for the purposes of corporation tax as it applies for the purposes of capital gains tax.

564 Woodlands. [CGTA75 s51(1) and Sch1 par12]

564.—(1) In the computation under this Chapter of the gain accruing on the disposal by an individual of woodland, there shall be excluded—

(a) consideration for the disposal of trees growing on the land, and

(b) notwithstanding section 535(2), capital sums received under a policy of insurance in respect of the destruction of or damage or injury to trees by fire or other hazard on such land.

(2) In the computation under this Chapter of the gain, so much of the cost of woodland as is attributable to trees growing on the land shall be disregarded.

(3) References in this section to trees include references to saleable underwood.

565 Expenditure reimbursed out of public money. [CGTA75 s51(1) and Sch1 par3(7)]

565.—There shall be excluded from the computation under this Chapter of a gain accruing on a disposal any expenditure which has been or is to be met directly or indirectly by any government, by any board established by statute or by any public or local authority whether in the State or elsewhere.

566 Leases. [CGTA75 s51(1)]

566.—Schedule 14 shall apply for the purposes of the Capital Gains Tax Acts.

CHAPTER 3 Assets held in a fiduciary or representative capacity, inheritances and settlements

567 Nominees, bare trustees and agents. [CGTA75 s8(3), s15(10), s51(1) and Sch4 par2; FA73 s33(4) and (7)]

567.—(1) References in the Capital Gains Tax Acts to any asset held by a person as trustee for another person absolutely entitled as against the trustee are references to a case where that other person has the exclusive right, or would have such a right if that other person were not an infant or other person under disability, subject only to satisfying any outstanding charge, lien or right of the trustees to resort to the asset for payment of duty, taxes, costs or other outgoings, to direct how that asset shall be dealt with.

(2) In relation to assets held by a person (in this subsection referred to as “the first-mentioned person”) as nominee for another person, or as trustee for another person absolutely entitled as against the trustee, or for any person who would be so entitled but for being an infant or other person under disability (or for 2 or more persons who are or would be jointly so entitled), the Capital Gains Tax Acts shall apply as if the property were vested in, and the acts of the first-mentioned person in relation to the assets were the acts of, the person or persons for whom the first-mentioned person is the nominee or trustee (acquisitions from or disposals to the first-mentioned person by that person or those persons being disregarded accordingly).

(3) Where exploration or exploitation activities are carried on by a person on behalf of the holder of a licence granted under the Petroleum and Other Minerals Development Act, 1960, the holder of the licence shall for the purpose of any assessment to capital gains tax be deemed to be the agent of that person.

(4) Schedule 1 shall apply for the purpose of supplementing subsection (3).

568 Liability of trustees, etc. [CGTA75 s51(1) and Sch4 par12]

568.—(1) Capital gains tax chargeable in respect of chargeable gains accruing to the trustees of a settlement or capital gains tax due from the personal representatives of a deceased person may be assessed and charged on and in the name of one or more of those trustees or personal representatives.

(2) Subject to section 567(2), chargeable gains accruing to the trustees of a settlement or to the personal representatives of a deceased person, and capital gains tax chargeable on or in the name of such trustees or personal representatives, shall not be regarded for the purposes of the Capital Gains Tax Acts as accruing to or chargeable on any other person, nor shall any trustee or personal representative be regarded for the purposes of those Acts as an individual.

569 Assets of insolvent person. [CGTA75 s40]

569.—(1) In this section, “deed of arrangement” means a deed of arrangement to which the Deeds of Arrangement Act, 1887, applies.

(2) In relation to assets held by a person as trustee or assignee in bankruptcy or under a deed of arrangement, the Capital Gains Tax Acts shall apply as if the assets were vested in, and the acts of the trustee or assignee in relation to the assets were the acts of, the bankrupt or debtor (acquisitions from or disposals to such person by the bankrupt or debtor being disregarded accordingly), and tax in respect of any chargeable gains which accrue to any such trustee or assignee shall be assessable on and recoverable from such trustee or assignee.

(3) Assets held by a trustee or assignee in bankruptcy or under a deed of arrangement at the death of the bankrupt or debtor shall for the purposes of the Capital Gains Tax Acts be regarded as held by a personal representative of the deceased, and—

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